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Canadian marijuana legalization appears to be on fast track, says Clarus

Medical Marijuana Canada

Medical Marijuana Canada Clarus Securities analyst Noel Atkinson says comments yesterday from Canada’s Minister of Public Safety Ralph Goodale are a sign that marijuana legalization is closer to becoming a reality than previously thought, a development he thinks is very good news for Licensed Producers (LPs).

In a research update to clients this morning, Atkinson notes that in an interview with the CBC’s “On The Coast” host Stephen Quinn, Goodale said the government was moving forward with is goal of legalizing recreational marijuana in Canada and that a legalization task force of representatives from the federal, provincial and municipal governments would soon be appointed.

“The preset regime with respect to marijuana has obviously failed and failed miserably because Canadian teenagers are among the heaviest users of marijuana in the Western Word, yet there has been no timeline set by the federal government,” Goodale told Quinn. “Municipalities and provinces want to be involved in how this is structured and how this is done. They want it to be done right and they want to be engaged in doing it right. That task force involving the provinces and municipalities will be announced very shortly. We’ll have a detailed announcement coming in the next several weeks.”

Atkinson says this development has positive ramifications for publicly listed licensed producers such as Aphria, Canopy Growth Corp., and Mettrum Health.

“This is the first concrete statement we have seen from a senior government minister that the federal government intends to move forward quickly with legalization of recreational marijuana,” says the analyst. “We believe the licensed producers (APH, CGC, MT etc) will see their stock prices rise once that formal announcement occurs in the next several weeks, as the licensed producers are positioned to be the primary wholesale suppliers to a government-regulated retail network for recreational marijuana.”

On April 1st of 2014, new rules were introduced that changed the Canadian government’s approach to marijuana and laid the groundwork for what many think is the inevitable legalization of the substance here. In the meantime, a half-step was taken. Under the Marijuana for Medical Purposes Regulations (MMPR), Health Canada no longer supplies marijuana to those with a proven medical need but instead tasked licensed commercial producers (LPs) to do so.

Atkinson says the market opportunity for licensed producers is huge and that Aphria (TSXV:APH), a stock that the analyst has a “Buy” rating and one-year target of $2.25 on, in particular is poised to realize upside.

“We estimate that the annual recreational market demand in Canada will exceed 1 million kg (1 billion grams), suggesting a wholesale market opportunity for the licensed producers of more than C$4 billion per year,” he says. “We also expect that 5-6 of the largest, best funded, and most capable licensed producers (again APH, CGC, MT plus likely Aurora, Tilray and CanniMed) will be the only ones able to scale to serve such a large market and therefore together assume a dominant market share of the wholesale production of recreational marijuana. We think APH is particularly well-situated in this regard because it has the only management team with a track record of producing, packing and wholesaling health products (Jamieson vitamins) at scale ($250MM/year).”

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

Comment

  1. The least that the government could do right now is return to its own laws that were in place before the Harper government wave of reefer madness.

  2. Im not sure which Harper laws you are referring too, but we have had medical mj since 2001. Harper wasn’t elected until 2006. There are no other laws to return to. The old system MMAR (now replaced with the MMPR) allowed for designated and personal grow operations. MMPR doesn’t, but there is an upheld ruling for now that allows personal grows. For now.
    The MMPR is a corporate bj of massive proportions and will also too likely have to be scrapped. Even if they legalize tomorrow our political retards will try to do it all the wrong ways first, before, in defeat, they have to adopt the dispensary model.
    Currently, the LCBO, the LP’s (like Aphira and Canopy) and the Pharmacists Association are all fighting for the right to peddle you some cannabis. The dispensary model, which produces the most economic and social good will be ignored until they have no other choice.
    Harper didn’t have a clue, not sure this Liberal government does either.

  3. This article is complete hype, riddled with errors and typos. classic otc stock pump bs

  4. Any particular part you would like to dispute? Google it, all fact Bob, just the facts.

  5. Thanks man, I’ve been deeply involved in this for decades, cannot believe the cluster f^$k it is turning into, but honestly not surprised.

  6. Tell that to the millions of growers spraying raid on their plants as we speak
    Its also just as easy to poison yourself

  7. I know right? Just look at all the death and illness it has caused so far. Oh, wait…none.

  8. For me i just want the right to grow my own for me. Just like if i don’t want to buy potatoes from the store i can grow my own, Same for beer and wine and whiskey as long as the whiskey is not over 20% alcohol.

  9. Ya youre definately right. Have not heard about a single poisoning from someone growing their own pot.
    doesnt refute the fact that theres people on the internet who post some wild ideas how to grow who have no idea what they are talking about. And people actually see that and copy it. And you have to sift through hours and hours of garbage to find small little amounts of good education.
    Guess thats the same with any hobby anybody searches on the internet ever!
    So peace! 🙂

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